• Tue. Oct 3rd, 2023

Estonia’s E-residency Program Plagued by Crypto Scammers

Sep 29, 2020
Estonia’s E-residency Program Plagued by Crypto Scammers

In its aim to become a cryptocurrency and digital currency powerhouse in the future, Estonia has been making some moves and one of them involved rolling out a number of digital programs, which include its e-residency program. This particular program has been designed to help foreigners in gaining access to the country’s digital infrastructure and enables them to run a business from abroad. The problem is that now the e-residency program is facing some backlash because it has been linked to one of the biggest fraud scandals to have occurred in Europe. A few European firms that are registered with the E-resident program of the country were fingered in a couple of large-scale exit scams within Europe.

Last week, a report was released by the Financial Intelligence Unit in Estonia, which highlighted that some of these companies were involved in a kind of fraudulent activity that prevented customers from withdrawing their assets. Likewise, these companies have also been accused of misappropriating huge sums of money and conducting fraudulent initial coin offerings (ICOs), as per the report. Since the report links members of the E-residency program to scam means that the entire country’s digital ambitions are now at risk. With almost 3.7 million people, the country has played a vital role in the development of Skype. 

In fact, it also launched the concept of e-voting, which numerous countries are now planning to use for their respective elections. The E-resident program had been launched by Estonia back in 2014 and 70,000 digital IDs have been issued to e-residents that are spread across 174 countries. Most of the foreign members belong to countries like Finland, Russia and Ukraine. Other than these developments, the Dirty-Money scandals have also brought disrepute to the country and its programs. Banks had been forced to close accounts of some e-residents in 2018 because they didn’t have any business links to Estonia. 

However, until this recent report, the banks were still allowing e-residents to open bank accounts. The team working behind the e-residency project has been putting in a lot of effort to ensure that the digital goals of the government are met. But, the project seems to have taken a major hit, with a number of banks becoming skeptical in dealing with accounts of e-residents. According to Estonian officials, it is necessary to make adjustments to the e-residency program for prevent any such possibility of fraud in the future. 

With the e-residency program, foreigners are issued a license for running their businesses in Estonia from abroad, but officials said that changes are required to prevent abuse. Meanwhile, some arrests have been made by the Estonian police related to companies that are telling their clients to hold virtual currencies like Bitcoin. Even though Estonia was amongst the first European countries that issued a license to crypto-based businesses, the nation now seems to be tightening its grip on the industry due to the fraud cases. Head of the e-resident team, Ott Vatter said that the team behind the project were working closely with the FIU to clarify matters. 

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